Kodak: Is a picture really worth $3 billion? Intellectual Property Analysis of Kodak

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Kodak, once an iconic name in photography, is now all but a fading Polaroid of its former legacy. Its digital imaging portfolio – ironically brushed aside by Kodak’s own management at the time – is being seen as the company’s saving grace. M•CAM suggests a Caveat Emptor: The over 1,000 patents involved in digital imaging should be seen through a quality and enforceability lens, so that the price of any transaction can be right-sized from the start.

Kodak became an industrial American icon in the last century as a leader in chemical film. Its fortunes precipitously declined this century as the shift to digital imaging became ubiquitous. Kodak management’s confidence on the several year obsolescence of celluloid is the picture of modern incumbent hubris. It has been clear to most observers that Kodak, ironically, failed to embrace its own digital technologies in time to remain a contender in this field. While staying focused for far too long on traditional chemical film, Kodak did develop a portfolio of digital imaging patents in advance of many of the current “brand name” companies that are delivering mobile handsets, tablets, and other devices today.
There is some attraction to controlling the foundation properties that serve as artifacts of early entry into the digital imaging sector.

Given the intense patent acquisition activity in the tech sector recently, it is worth investigating the digital imaging portion of Kodak's patent portfolio to expose its commercial viability. Kodak’s decision to put these imaging patents up for sale in July, in addition to its patent infringement assertions last January against Apple and others, seem to be too little, too late to save a dying market relevance. For that reason, we focus specifically on Kodak’s digital imaging patents in this week’s report, and explore whether this subset of patents could be worth the $3 billion price that continues to surface in market gossip, or if buyers should right-size their bids based on better visibility into the Kodak properties.

A commercial analysis, using the M•CAM proprietary unstructured data mining algorithm, was performed on the digital imaging portion of the Kodak patent portfolio, which revealed at least 31% of the portfolio are impaired and unlikely to be of commercial value. This impairment comes from patent filing carelessness and other breakdowns in patent quality – not necessarily from a lack of innovation. Further, an analysis was performed using the M•CAM DOORS™ platform on the commercial ecosystem surrounding the digital imaging patents, which identified the top twenty entities that may find these properties to be of interest.

Finally, we give an example of some of Kodak’s early digital imaging patents by looking at the strength and enforceability of the five patents it asserted against Apple and others in 2010. Interestingly, that analysis disclosed that all five of those patents scored as commercially impaired, suggesting Kodak’s last-gasp strategy to stay afloat in today’s marketplace by asserting some of its patents could be a losing strategy.